We suggest that you begin the renewal process ahead of time, as you could lose opportunities to lock in at a more advantageous interest rate. It is thus strongly recommended to begin the process about 4 months in advance.

Doing business with your mortgage broker

Your mortgage broker will guide you through the next stages of your renewal and will help you make an informed decision based on your particular circumstances. It is likely that since the signing of your mortgage 1, 5 or 10 years ago, your financial situation has changed drastically. Your life has evolved and your needs are no longer the same. It is therefore necessary to take the time to re-evaluate your objectives in order to determine the best mortgage product for you. There are vast arrays of options available and a mortgage broker will help you choose the product best suited for you. To help with this process, you need to ask yourself a few questions:

• What can you afford to pay per month?
• Do you need cash for renovations, to pay for your children’s education or make a major purchase?
• Can you withstand rate changes?
• Are you thinking about moving soon?
• Do you want to pay down your mortgage faster?
• Are you satisfied with your current lender? Is the offer meeting your needs?

All these questions will be used to determine which product will be best suited to your situation: variable rate, fixed payment, line of credit, refinancing, prepayments, etc.  You will then be ready to determine what your needs are for your mortgage renewal.

Is it possible to renegotiate your mortgage before the term is over?

Yes, it is possible to renegotiate your mortgage before it comes to term. If your mortgage no longer meets your needs or if interest rates fall, you might want to renegotiate your mortgage contract ? that is to modify the terms of your mortgage. But first, you must determine if it’s worth the effort or if there are other solutions that better meet your requirements.

Ask your lender if you can cancel your contract.  If the financial institution allows you to effectively terminate your mortgage contract, it may impose a penalty and other fees.

If you must pay a penalty, the conditions will be outlined in your contract. The penalty fees are usually calculated from your interest rate and can be several thousand of dollars.

To find out how much your penalty will be, contact your lender.

Weigh the benefits and the risks

With the information at hand, you can decide whether it’s beneficial for you to pay the penalty in order to take advantage of a lower interest rate. These savings could allow you to renovate, contribute to your children’s education, acquire a secondary residence or consolidate your debts. Weigh the benefits and the risks:

Benefits

• You get a lower rate and potentially lower payments.
• If you keep the same payment as with your current agreement, you will be to able pay off your mortgage sooner.
• You can lock in the lower interest rate for the new term of the mortgage.

Risks

• If there is a penalty, the cost could be more than any savings that you might get.
• The interest rates may continue to go down, in which case you would not lock your new mortgage in at the lowest rate possible.

A mortgage broker is able to help you assess your options. You can decide together the best strategy to adopt.

Make an informed decision on your renewal!

The Government of Canada has renewed the popular ecoENERGY Retrofit – Homes program. From June 6, 2011, until March 31, 2012, homeowners are eligible to receive grants of up to $5,000 to make their homes more energy-efficient. Homeowners who participated in the program to date have saved 20 percent on their energy bills.

There are two important changes to the program. First, there is a requirement for participants to register directly with the program before booking their evaluation. Second, homeowners will now be required to provide receipts to their energy advisor at the time of the post-retrofit evaluation to confirm eligibility for the grant.

How to apply

The first step in the renewed ecoENERGY Retrofit – Homes program is to register:

If you or the previous owners have not obtained an energy evaluation of the property between April 1, 2007 and June 5, 2011, click on the following link to register:

http://oee.nrcan.gc.ca/residential/personal/retrofit-register/register.cfm

For homeowners who participated in the program between April 1, 2007 and June 5, 2011, and who did not receive the maximum amount of $5,000, you can submit another application for improvements purchased and installed on or after June 6, 2011 by clicking on the link below:

http://oee.nrcan.gc.ca/residential/personal/register.cfm

If you plan to apply for multiple properties, a form must be completed for each one.

If you are not sure which form to complete, follow the instructions on the registration page.

Only products purchased on or after June 6, 2011, and installed after a pre-retrofit evaluation are eligible for an ecoENERGY grant. Funds are limited and all energy retrofits and post-retrofit evaluations must be completed by March 31, 2012. The homeowner must also sign the grant application by this date.

Steps to apply for the grant

1. Registration: First, register with Natural Resources Canada (NRCan) and receive a registration number. If you do not have Internet access, you can call 1 800 O-Canada (1-800-622-6232).
2. Pre-retrofit evaluation: Hire a local service organization licensed by NRCan. They will send a certified energy advisor to perform a pre-retrofit energy evaluation from the attic to the foundation. If the property has already been evaluated under this program since April 2007, a new pre-retrofit evaluation is not required.
3. Retrofit with receipts: Choose, purchase and install eligible measures described in this document, and keep your receipts for three years. The more upgrades you implement, the more money you can receive, and the more energy you can save.
4. Post-retrofit evaluation: Complete your renovations and obtain a post-retrofit evaluation no later than March 31, 2012. You must show all your receipts to your energy advisor during the final evaluation to verify that you purchased and installed eligible upgrades after June 6, 2011, and after a pre-retrofit evaluation.

Most homeowners receive a grant cheque from the Government of Canada within 90 days of their post-retrofit evaluation.

You could take advantage of this great program to stay warm this winter by investing, for example, in your attic insulation. It is a relatively easy project, which will bring comfort to your budget for many years. An insulated attic will reduce the energy amount required to keep your home warm by preventing warm air leakage caused by air currents and breaches. For a 2-storey house, this could translate into savings that can reach up to 28% of your heating and air conditioning bills.

You may also choose to limit your holiday shopping to one only gift this cold season by investing in a home renovation project that will benefit the entire family. By transforming your basement into an additional living space, for example, you don’t only create an extra room, but you also offer your family a place to spend time together.

In short, use these grants to treat yourself to a cozy nest this winter while saving the rest of the year on your energy bills.

Useful links (right column):

To learn more about the type of renovations that are eligible under theecoEnergy Retrofit – Homes program, please click on the following link:

http://oee.nrcan.gc.ca/residential/personal/pdf/ecoENERGY-grant-table-20110606b.pdf

To find a local service organization licensed by Natural Resources Canada that will send one of its energy advisors to your home for an assessment prior to the home improvements, please enter the first three digits of your postal code on the following web page:

http://oee.nrcan.gc.ca/residential/personal/new-home-improvement/contact-advisors.cfm?attr=4

Should you discover a mould presence in your home, you need to act quickly so as to limit its spread, even if it seems to be an insignificant amount. Mould is in fact a microscopic fungus that is harmful to your health. This type of fungus, unlike those that are harmless such as yeast, develop in humid areas where it finds the nutritive elements it needs.

In a home, damp zones may be created by water infiltration, by regular activities that require water (shower, laundry or dishwashing), by a deficient ventilation system that keeps humidity in and/or by construction materials which may themselves contain sufficient moisture to allow the formation of mould.

Mould can be difficult to detect. It does not always manifest itself in a visible recognizable form, however it is extremely important to be vigilant in checking for its presence. Some of the indications of mould that you should check for are fading or black, white, orange, yellow, blue or violet spots. To differentiate mould from regular run of the mill spots, pour a drop of Javel water on it. In the case of mould, the stain should disappear or change color. A typical musty or earth smell can also indicate a mould presence even if you can’t see it. If you see any water spots, water condensation or a leak, it is likely that, sooner or later, mould will grow in these areas.

Mould has two major effects. First, it can cause material degradation that could damage your property structure. Of course, it all depends on the quantity of mould and its development stage. It can also cause serious health problems, especially among pregnant women, babies, the elderly and those who suffer from other health and respiratory problems.

Mould presence can be divided in three categories. Firstly, it is considered to be a “small zone” when the mould covers an area smaller than one square meter. You can clean a “small zone” yourself using a detergent solution such as an odorless dishwashing liquid. Note that, contrary to popular belief, bleach cannot be trusted for disinfection purposes, since too many immeasurable factors must be taken into account.

When cleaning, make sure to wear a mask, rubber gloves and protective glasses. Use a cloth soaked in detergent and water to clean hard surfaces, and rub the affected area. Then, rinse with clean water with another cloth and dry the infected area as soon as possible with a fan. When cleaning gypsum and softer materials, one must use baking soda and a damp cloth to rub the area. Painting over mould will not be an effective remedy. This will only act as a temporary camouflage as the stains will reappear shortly after. It is therefore important to clean and dry the surfaces before painting.

If you detect more than 3 mould plates each covering less than one square meter, or if combined they cover an area greater  than one square meter, but less than three square meters, you are in the presence of a “middle zone”. It is still possible to clean a “middle zone” yourself, however, if mold reappears after washing, it is recommended to contact a specialist to assess its origin, because the problem could get worse with time.

Finally, if the affected area is greater than the size of a sheet of plywood, you’re facing a “large zone”. In such cases, it can cause serious health issues and you should not attempt to clean these surfaces yourself. Contact a specialist who will find the source of the problem and will establish an appropriate intervention plan. At this level, you might need to replace the materials rather than simply washing them.

The best way to avoid the appearance of mould in your property is to always keep it as dry as possible. Your goal therefore is to reduce moisture sources and, if necessary, change some of your habits. Immediately repair any damage that could cause water leakage, frequently clean all surfaces and recycle any unused items instead of storing them in your garage or basement. Tour your property regularly to detect mould and check all areas subject to water leakage. Use a dehumidifier if your house is prone to humidity and use a hygrometer to maintain the relative humidity below 45% in winter. Install a good extractor fan in your bathroom, take shorter showers and choose a high quality kitchen hood to make sure the air is well evacuated to the outside.

In short, when facing mould, it is very important to act quickly to avoid its negative effects and before it spreads to other surfaces. Prevention is always preferable to the remedy!

It has been said that  investing in an income property was a good way to start your investment portfolio? This may in fact be true, however there are certain criteria for evaluating a property that you should be aware of prior to proceeding with your purchase. It is imperative that you do all your due diligence to ensure that your investment is not only sound but that it fits your needs.

Let us look at the reasons why people say that purchasing a revenue property is a good investment.  The three main reasons are as follows. You intend to live in one of the building’s apartments and the rents received from the other tenants will help you pay your mortgage loan. Oddly enough, what often happens when purchasing a revenue property is that you will qualify for a loan which you would have been turned down for, if it was purely a single family home. The fact is, that in the case of an income property, the banks take into account a certain percentage of the revenues as income which basically ensures your ability to repay your mortgage loan.

The second reason, which is of particular interest to young people and self-employed individuals, is that an investment in real estate allows for the creation of a pension fund. Over time, providing that you keep your income property, your mortgage loan will be totally paid off by the time you retire and most likely well before that. The rents you receive will be pure income aside from any maintenance and repairs, which need to be done from time to time. The deal is basically protected against a downturn in the economy, because even in a case where, your property has lost value, as long as you will have tenants who pay rent, the lost of money will be identifiable only on paper, because you will continue to get incomes through rents. When investing in an income property to build up a pension fund, the goal is not the capital gain, but the income that you will get during your retirement.

Finally, the third reason why it may be advantageous to buy an income property is that it is a good starting point to build up a portfolio in real estate investment. Once your term expires, you can refinance your mortgage and use the money to purchase another rental income property. Using this technique, you will reuse the down payment invested in the first building, thus you can purchase a new property without having to spend any more money.

On paper, these arguments seem very convincing, but keep in mind that you must always assess the disadvantages which may affect your everyday life. Indeed, owning such a property is very demanding and can become a source of anxiety. Think about tenants, for example. You will have to learn how to select tenants and how to manage the bad debtors or those which are unpleasant. You will also need to learn the laws and payments established by the Régie du logement, which may help you better manage difficult situations. Fortunately, several owners associations exist to help you. Feel free to ask them any question! Remember one very important point when planning your budget. You must base any budgeting on your actual income and not on your anticipated income thus avoiding any nasty surprises.

Another disadvantage of owning an income property is that you must attend to the maintenance of the building and make all important repairs. Despite the fact that the normal maintenance of a building must be done whether it is a one family home or an income property, remember that if you have an income property, you have to do the repairs for each of the tenants as well as your own repairs. Maintenance is less expensive in the long run since it could prevent more serious problems which ultimately will cost you much more to repair. This of course requires a greater investment of your time as well. Moreover, think about the fact that there may well be tenants that call you on weekends or weekdays evenings to ask you to make some minor repairs or to report a troublesome tenant.

If these disadvantages do not scare you, and you want to go forward on this adventure, here are some criteria to evaluate to help you make better choices. For example, carefully choose the site where you want to buy a multi-plex. A functional rental unit is one that has storage facilities and is close to close to public transport and shopping centers. These will be much easier to rent than an isolated rent in a residential area which is only partially served by public transport. As the old adage goes “The most important thing is location,location,location”.

To see if you can afford the purchase of a particular building, you can rely on the coverage ratio of debt because the lenders partly base themselves on this criterion to grant you a mortgage loan. To calculate this ratio, subtract your potential loss of rental vacancies (usually from 3 to 5 % of your income) and your operating costs (taxes, heating, and maintenance) from your potential earnings. Take that amount and divide it by the amount of your mortgage payment. You should get a ratio of at least 1.10 – 1.20 for the loan application to be accepted by lenders.

Also, remember to assess the revenue from the property. According to the rules of the Régie du logements, you are limited in the amount that you can increase the rents. If a tenant has been living in the apartment for many years, he may be paying well under the market price, which could affect the total of your income at the end of the year.

To help you buy an income property, it is advisable to consult a professional. He will be better equipped to help you find a building at a fair market value.

Finally, property values tend to increase over the years, which make us think that real estate is a sound investment. In general you will not suffer long-term losses in real estate. On the other hand, the best advice that can be given is: diversify your investment types. You will be better able to absorb losses from any particular area.

When the time comes to purchase or renew your home insurance, you should ask yourself what type of coverage you truly need. Find out what are the particular risks associated with your property, take inventory of all your possessions and assess the true value of your belongings, particularly those of great value. You should then shop around by checking with the various insurance companies and take the time to evaluate the various clauses of the each contract. While doing this, always keep in mind that the basic home insurance contracts do not include the following:

-          flooding from overflowing river banks

-          water penetration through walls, doors or windows

-          repeated returns of septic tank or sewage overflows

-          dry rot or mould (unless caused by a disaster stated in the contract)

-          collapse of movable property or building due to the weight of snow and ice

-          damages to the pool

-          theft of animals

-          damages caused by an oil leak.

If you think that your property could be susceptible to this kind of claim, you will have to put in  extra effort because it may be more difficult to find an insurer in these cases. There are some companies that are open to negotiation, and they may agree to put in an additional clause to increase your coverage, for example protection against overflowing sewers, water seepage, the collapse of movable and immovable properties, or the damages to a swimming pool.

On the other hand you should be aware, that contrary to popular belief, the damages caused by most of the natural disasters such as tornadoes, windstorms, hurricanes and hail are covered. Note that the major exceptions are earthquakes and landslides.

Another element to check before signing your contract is the value of your belongings. Several objects like jewels and furs have a limitation (usually to a maximum of 3,000 $) in the home insurance policy. If you have objects which are worth more, you will also have to include an additional rider to the policy, which, of course, will increase your insurance premium. Moreover, be careful to properly assess the real value of these objects and if possible, keep the invoices, the guarantees and some photographs of your belongings outside your home. You will then be able to produce evidence to give your insurers in order to facilitate the replacement of your belongings in case of disaster.

Finally, visit the website http://www.infoinsurance.ca/en/ to learn more about home insurance in Quebec. This site is a great way to get more information not only on what you should know before signing a home insurance policy, but also on what you can do to prevent a disaster, and how to be prepared should one occurs.

Taking into consideration that the down payment required for the acquisition of a secondary residence is generally 5%, it is an accessible dream. It is important however to assess your financial means, because some lenders can apply requirements that are quite restrictive. There are several ways to finance a second property, including using the value or equity gained on your first property. Do not hesitate to contact your mortgage broker to inform yourself on the different options.

Find out about the water supply. Does the water come from a lake, an artesian well, or a surface well? It is important to know because the water’s quality can be affected by these factors. If the water comes from a lake for example, the chances that it might be contaminated are greater than if it originates from an underground source. You can find more information on this subject on the Website of the ministère du Développement durable, de l’Environnement et des Parcs: http://www.mddep.gouv.qc.ca/eau/inter_en.htm. You should also be aware that a water test will be required by the lender for all properties whose water supply is not municipal.

Another point to be aware of is the sewage system. If the property is not connected to a municipal sewage system, it is important to learn more about the operation of septic tanks, the installation of these systems and the provincial regulations, you must be aware of. If you rent your property for a short term for example, you must know whether the capacity of the septic tank is sufficient for the number of people inhabiting the home. To learn more about installation, maintenance and repair of septic tanks, visit the Website: http://www.cmhc-schl.gc.ca/en/co/maho/gemare/gemare_009.cfm.

Also, look at the property’s foundation. Is it made of concrete blocks? If this is the case, pay close attention to water seepage marks, as you may have to install a sealing membrane. To avoid these problems, choose a property with a poured concrete foundation.

You should also learn more about the compliance of installed fireplaces. The regulations are generally the same as for any other property. Don’t forget to ask your insurance company for an estimate vis-à-vis this type of property. Some properties, due to their distance (300 m from a fire hydrant and 8 km from a fire station), are more expensive to insure. In addition, if you want to rent out your property, it is important to mention it to the insurers. Different rates may apply according to the rental terms and conditions.

Also, if you buy your second property to rent it out, you should take the time to learn about the laws. The rental of a property is classified by your intent to rent it out on a short or long term basis. The short term (usually 31 days or less) is the most restrictive. The property must be classified by the Corporation de l’industrie touristique du Québec (CITQ) and it must be located in a commercial zone that allows for it.

Don’t forget that to maximize the value of resale or rental of your property, there are a few more points to investigate. Check out the sun’s exposure, particularly if you’re in a mountainous region. A large exposure will add value to your property. Also assess your access to the water. Does it have a tolerated access or a legal servitude allowing access which is recorded in a notarial deed? Furthermore, pay attention to the health of the waterways, including the lakes. An excessive accumulation of nitrogen and phosphorus could hinder your ability to drink or bathe in the water. To check out the health of the waterways near the property, you can visit the Website of the ministère du Développement durable, de l’Environnement et des Parcs: http://www.mddep.gouv.qc.ca/index_en.asp. Finally, evaluate the amount of maintenance required for the upkeep of the property. Dependent upon your needs a condo might be a good solution to avoid mowing the lawn, cleaning the swimming pool, etc.

Finally, be aware that at the time of resale of a secondary property there are no exemptions for capital gains taxes as opposed to exemptions allowed for the sale of a primary residence.

In short, the purchase of a second property is as important as the purchase of the first. It is a big investment which you can enjoy for many years. Never neglect the preparation process and do not hesitate to ask advice from professionals who would be happy to help you. ]]> http://mortgageratemontreal.com/home-purchase/purchasing-a-secondary-residence/feed/ 0 http://mortgageratemontreal.com/home-purchase/purchasing-a-secondary-residence/ http://feedproxy.google.com/~r/MontrealMortgage/~3/digY6OiaB_I/ http://mortgageratemontreal.com/uncategorized/real-estate-fraud/#comments Tue, 10 May 2011 04:05:29 +0000 admin http://mortgageratemontreal.com/?p=471 Did you know that real estate fraud existed? If you are a current or future home owner, it is important to know the risks which you are exposed to. First, you must know that there are two types of fraud which you could be victim of. In both instances, the consequences are major: the victims can suffer a significant financial loss, and in the worst case scenario, they could lose their home.

The title fraud begins with identity theft. The criminal can get the information he needs to steal your identity in many ways: looking through your dumpsters, stealing your mail, or by computer hacking. Once he has the information, he can use your identity to assume the title of your property. He can then sell the house or get a new mortgage and once it is done, he disappears with the money. Over all, the worst part is that the victim may never know about the fraud until the mortgage lender calls concerning mortgage payments he has not made or until the new owner shows up at the door claiming to own the place.

The second possible fraud is less common. It happens as part of a legal process called foreclosure. This process is established to help an owner who is unable to make his mortgage payments. He can call upon a mortgage lender who will take possession of the house and sell it to cover the debt. In these cases, a criminal will offer the owner to lend him money to cover his expenses and consolidate loans in exchange for an agreement to transfer the property title. Once it’s done, the criminal may keep the victim’s payments without paying back the debts. He may also sell the house or get another mortgage and then disappear with the money. Unfortunately, in all these scenarios, the victim may end up on the street with debts he has no way of repaying.

As most fraud begins with identity theft, the best advice we can give is to protect your personal information. It is wise to never give your personal information to people you don’t know. Also, shred all documents with your personal information on it, protect yourself from mailbox theft and order a copy of your credit report every year to see if all the information is accurate. In doing this, you will be able to quickly discover if someone is using your identity. To prevent foreclosure fraud, you should, if you have problems with your mortgage payments, contact your mortgage lender first. Also, should you need to transfer your property title, you are best to consult a lawyer. He would be the best person to help you with this. Finally, you can look into getting title insurance which will cover losses related to title fraud.

It is best to inform yourself about all these security measures. As the old saying goes: Better safe than sorry!

When pondering whether to make such a large investment, it is normal to have certain doubts and fears. Is it the right time? Can I afford to finally become a homeowner? How much would monthly mortgage payments be?  What is the difference between the monthly cost of a property mortgage as opposed to the current rent that I am paying my landlord?  How much can I afford to invest?  ? To help you, a mortgage calculator found on this website, can calculate what your borrowing capacity may be while taking into account, taxes, services, and other amounts that you would not normally pay as a tenant.

• Do you have a down payment? Your mortgage broker can explain the latest rules regarding the percentage of the purchase that you can finance. Generally, a minimum down payment of 5% is required. Does it come from your savings, a gift, or cash back on your mortgage? If you have already contributed to an RRSP, you could withdraw money – tax free – and use as a down payment with a HOP (Home ownership plan).

• Is your credit score good? Your credit score will determine whether your mortgage application will be accepted or refused.

• Have you allocated ample funds to deal with closing costs such as moving costs, legal fees, and land transfer tax (welcome tax)? You will however be happy to know that an amount of up to $ 750 could be reimbursed to you through a federal tax credit.

Finally, according to an Ipsos-Reid poll published in 2010, 91% of Canadians believe that home ownership is a good investment. More Canadians expect to purchase a home within the next two years than did in the two years previous..  Owning a home may not be for everyone, but the fact remains: More and more Canadians look forward to owning their little piece of paradise.

Speaking of due diligence you must be careful when making a promise to purchase that you give yourself enough time to get all the documents from the vendor and that the amount of days marked in the promise to purchase for the procurement of a mortgage only begins once you have every single document requested from the vendor (for eg the rent roll, the leases, the financials, etc.)

The banks will be requesting your PNW’s which is a declaration of you personal net worth. They want to make sure that your finances are strong enough to cover the debt service should the property at any point become incapable of covering the mortgage.

Unless you have very deep pockets and do not need financing from a bank, do not attempt to purchase a building that has no tenants, because trust me, it will be a colossal waste of time. The best kind of tenant is one who has great financials and a long term lease. Here we are not talking about a multi residential property, but an industrial or commercial property. A lease of 2 years in many cases won’t cut it. The banks are much happier with 8 years and up with options for renewal. This way they know that you will not lose your source of revenue before your mortgage term is up.

I have just given you a small preview of what to expect when purchasing a commercial property for the first time. To ensure success make sure that you have a professional to guide you or at least someone who has been through this before so that they can warn you of all the pitfalls.

Having said that, rest assured that finding the right property for you can be a very good investment.